THE Australian Competition and Consumer Commission has released an issues paper detailing its upcoming study of the national beef and cattle market.
The new market analysis was announced by ACCC Chair Rod Sims this week and will be the first undertaken by the competition watchdog’s new $11.4 million Agriculture Enforcement and Engagement Unit, introduced by the Coalition government.
Mr Sims and other ACCC commissioners including newly appointed Agriculture Commissioner Mick Keogh will engage in the study’s development.
Initial submissions will be due by May 6 while public consultation forums will be held in June - including in regional areas - with exact locations and dates still to be confirmed.
The study’s draft findings will be released in late September followed by a consultation period the following month and a final report due to be published in late November.
Mr Keogh said “I encourage anyone involved in the cattle and beef industry to read the issues paper and provide the ACCC with a written or oral submission”.
Key issues to be covered by the study include:
competition between buyers of cattle, and suppliers of processed meat to downstream customers
the implications of saleyard attendees bidding on behalf of multiple buyers
impediments to greater efficiency, such as bottlenecks or market power at certain points along the supply chain
differences in bargaining strength, and the allocation of commercial risk between cattle producers and buyers
the transparency of carcass pricing and grading methods
seeking information on the share of profits among the cattle and beef production, processing and retailing sectors
barriers to entry and expansion in cattle processing markets.
Evidence collected and recommendations from the Senate Rural and Regional Affairs and Transport References Committee’s inquiry into market impacts on the red meat processing sector will also inform the ACCC’s market study.
The Senate Committee is due to hand down a report on May 5 but could produce an interim report.
WA Labor Senator and Committee chair Glenn Sterle said if a double dissolution was held – which has been flagged by Prime Minister Malcolm Turnbull – the inquiry was “dead” unless the incoming government wants to continue it.
“This is why there’s a panic on getting inquiries finished so there’s a report tabled,” he said.
Senator Sterle also welcomed the ACCC’s market study and also urged cattle producers to ventilate their views and concerns.
The ACCC has also said it will also accept anonymous and confidential submissions into the study but compulsory evidence gathering powers could extend the deadline.
The Senate Committee investigation started after allegations of collusion were made against nine meat processors when a sale at the Wodonga saleyards at Barnawartha, Victoria, was controversially boycotted in February last year.
The ACCC also investigated the boycott and found competition concerns existed but the evidence at hand could not prove any collusion occurred between the cattle buyers.
The issues paper said potential outcomes of the market study included; improved transparency about competition and trading practices in the supply chain; assistance for industry participants from the ACCC about rights, obligations, and options to encourage effective competition; and opportunities for the ACCC to make recommendations and or to work collaboratively with government and industry to develop solutions to any competition or other trading problems.
Further action could also be undertaken by the ACCC to address any behaviour in the industry that raised concerns under the Competition and Consumer Act 2010.
“The ACCC notes that there has been considerable concern raised in both the recent Senate Inquiry and during recent ACCC investigations about the relationship between retail beef prices in Australia, live weight and carcase prices in Australia and live weight and carcase prices overseas,” the paper said.
“In particular, submissions during the inquiry pointed to the difference in live weight prices received for cattle in the United States compared to live weight prices received by farmers in Australia.
“The ACCC therefore considers it is important to understand more about the interaction between export and domestic cattle prices, beef prices and the influence that retailers and processors have on these.”
In providing background for the issues paper, the ACCC also pointed to its decision in early 2015 to not oppose the acquisition of Australian Consolidated Food Investments Pty Ltd (Primo Smallgoods) by JBS, following a review.
“The ACCC decided not to oppose this acquisition, as it was considered unlikely to substantially lessen competition,” the paper said.